Apparently Americans were emptying their wallets more busily in the final quarter of last year than anyone thought.

The Commerce Department said Thursday that gross domestic product rose by 1.4% in the fourth quarter, a revised figure far stronger than the 0.2% gain shown in the initial take. Economists polled by Reuters had thought GDP growth would be revised up to 0.8%.

"It's astonishing to get this kind of number considering the events that the quarter immediately followed," says Credit Suisse First Boston bond market strategist Mike Cloherty. "If you took a poll of people in late September on what the fourth quarter was going to be, I don't you would have had anyone with a plus sign. Certainly not this big of a plus sign."

It's also notable that the economy was able to grow so quickly while companies were cutting inventories so hard. Had it not been for inventory reductions, GDP would have grown at 3.6%. Personal consumption added 2.14 percentage points to GDP growth. A big bump up in government spending added 0.58 percentage points.

The economic downturn no longer matches the typical layman's definition of recession as at least two quarters of economic contraction. The unofficial arbiter on the U.S. business cycle, the National Bureau of Economic Research, uses a different definition for recession. They've indicated that there is no way that they'll decide the downturn turned out to not be a recession. But it is pretty clear that it is a recession only in name.

At the outset, stocks reacted well to the GDP news -- the Dow Jones Industrial Average was lately up 30 points. Treasuries sold off, but only slightly. Most bond investors believe that despite the fourth quarter's strength and likely good growth in the first quarter, the economy's momentum won't carry through strongly to the end of the year. Since growth will be muted, they think the Fed won't be anxious to raise rates.

Fed Chairman Alan Greenspan seems to share that view. In testimony before Congress yesterday, he said he felt the economy was at or near a turning point, but that because of the continued hangover in capital spending from the go-go years, and because it seems unlikely that an already strong consumer can boost spending significantly more, the economy won't bounce the way it usually does after a recession.

"Despite the disruptions engendered by the terrorist attacks of Sept. 11, the typical dynamics of the business cycle have re-emerged and are prompting a firming in economic activity," said the chairman in his opening remarks. "An array of influences unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery."

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